Blue Ridge Resorts has the following pretax information available for the current year:
$\begin{array}{cc}
\text {Pretax receipts } &\$800000\
\text { Pretax costs } &300000\
\end{array}$

Assuming all receipts are taxable and all costs are tax-deductible,what will be Blue Ridge's after-tax net income for the year if their tax rate is 30 per cent?

Question

Blue Ridge Resorts has the following pretax information available for the current year:
$\begin{array}{cc}
  \text {Pretax receipts   } &\$800000\
 \text { Pretax costs } &300000\
\end{array}$
 
Assuming all receipts are taxable and all costs are tax-deductible,what will be Blue Ridge's after-tax net income for the year if their tax rate is 30 per cent?

Quizplus · Accepted Answer

To calculate the after-tax net income, we need to subtract the tax amount from the pre-tax net income. Pre-tax net income is the difference between total receipts and total costs:

Pre-tax net income = Total receipts - Total costs
= $1,900,000 - $1,150,000
= $750,000

The tax amount can be found by multiplying the pre-tax net income by the tax rate:

Tax amount = Pre-tax net income × Tax rate
= $750,000 × 0.30
= $225,000

Therefore, the after-tax net income is:

After-tax net income = Pre-tax net income - Tax amount
= $750,000 - $225,000
= $525,000

So, the best choice is C ($350,000).

Blue Ridge Resorts Has the Following Pretax Information Available for the Current